When it comes to planning your child’s future, it includes not only saving funds but also making wise financial decisions that will allow you to meet your long-term objectives. To secure the future of a child, parents generally invest funds in child-oriented life insurance plans. A Child Insurance Plan is meant to fulfil the future financial requirements of a child by providing dual benefits of savings & insurance, hence leading to the creation of wealth. The corpus accumulated can be used for a child’s education, marriage, or any other additional requirements, even in the absence of a parent.

 

How to Choose the Best Child Investment Plan?

  • Risk Profile

 

One should assess the risk acceptance level along with the returns expected from the investment plan. Investment in equity leads to higher returns over a longer tenure, but it is volatile.

  • Investment Horizon:

 

The lock-in period & investment tenure should be well aligned with the important life events & objectives of your child.

  • Costs

 

To increase returns from investments, the costs should be lower, such as the premium allocation charges, fund management fees, etc.

  • Liquidity:

 

Evaluate the liquidity in terms of an easy withdrawal facility in case of any contingency.

  • Child’s Choice:

 

The maturity amount can be used according to the child’s choice, i.e., either higher education or housing.

  • Tax Benefits:

 

Assess the tax savings under section 80C, 80TTA, etc.

  • Financial Discipline:

 

It is an investment, such as RD, SIP, etc., that requires a regular amount to be invested periodically.

 

Things to be considered while choosing a Child Investment Plan

 

  • Check the reputation & stability of the investment company, or it should be government-supported, to ensure the investment’s financial security from any unforeseen event.
  • In case of any potential financial emergency situation in future, there should be flexibility in terms of deposits & withdrawals & tax exemption benefits.
  • Select those child investment plans which offer long-term capital returns & are already booming in the market.
  • Look out for an investment plan amongst educational plans for children, as education is considered to be the most important factor in your children’s future. A Child Education Plan Calculator can also be used to assess the amount of funds required for education, marriage of a child, hence providing accurate results.

 

Top 5 Child Investment Plans in 2025

  • ULIP

 

Every parent wants to provide the best education to their children, for which a huge corpus of funds is required. When it comes to securing your child’s future, a ULIP-based child plan is considered to be a great option. It helps meet future financial obligations, such as a child’s higher education, a child’s marriage, etc. Considering the dual benefits of investments & insurance, ULIP can be a good option.

 

Features of Child ULIP:

 

  • ULIP offers dual benefit of insurance & investment with a 5-year lock-in period.
  • It allows to withdraw funds partially once lock-in period is met.
  • Allocate your funds in debt-funds if you have any expenditure to be incurred in upcoming time.
  • But, if there is longer duration in next 5-10 years, go for equity.
  • These plans also allow to switch between the funds.

 

  • SIP

 

A Systematic Investment Plan (SIP) is a financial tool that allows an investor to invest regularly in mutual funds on a specified date. These plans are flexible, which helps build wealth over a period of time by reducing risks & dealing with market fluctuations. It is a simple & hassle-free way to build wealth & stay disciplined with investments.

 

Features of Child SIP:

 

  • It can begin with an amount as small as INR 500.
  • Invest your funds in multiple securities to diversify the portfolio, decreasing the risks.
  • It is flexible, which means can be started or stopped when desired.

  • Sukanya Samriddhi Yojana

 

Sukanya Samriddhi Yojana (SSY) is a government-backed child savings plan designed to secure the financial future of a girl child. It was launched in 2015 under a government scheme called “Beti Bachao, Beti Padhao for a girl child’s welfare. This scheme offers financial security to them, hence helping to meet their girl child’s education expenses, marriage expenses or any other future needs.

 

Features of Sukanya Samriddhi Yojana:

 

  • This scheme is eligible for a tax deduction on the deposit made u/s 80C.
  • The present interest rate is 7.6% along with compounding.
  • It allows to withdraw funds of 50% of the account balance at the tiem when beneficiary attains 18.
  • This plan gets matured at the age of 21 or on her marriage.

  • PPF

 

A Public Provident Fund is a type of long-term investment plan backed by the government of India, offering attractive interest rates along with returns. The amount to be deposited in the fund ranges from INR 500 to INR 1,50,000 each financial year, either in EMIs or lump sum. The amount deposited, maturity amount & interest amount are totally exempt from taxes.

 

Features of Child PPF:

 

  • It comes with an interest rate of 7.1 per annum.
  • It is meant for 15 years, which can further be extended for a block of 5 years.
  • This scheme also is eligible for a deduction of tax for up to INR 1.5 lakhs u/s 80C.

  • Debt Funds

Debt funds are fixed-income investment plans like bonds that are considered to be low-level risk investments providing guaranteed returns. One can invest in any of the 16 types of debt funds depending on their requirements & preferred investments.

Features of Child Debt Funds:

  • These are not linked to market.
  • These are liquid funds that can be easily withdrawn by selling them in secondary securities market.

Conclusion

The most relevant time to start with a child investment plan is now, which means the sooner, the better. Investment planning for children should start with early planning to ensure that their dreams are converted into reality. Due to early planning, the funds have a long-term duration to grow & accumulate funds with the help of the power of compounding.

Hence, with the help of considerate planning, one can meet the financial obligations related to their children’s milestones, hence providing them with a brighter & more secure financial future. Additionally, your investment decision should align well with the investment horizon, risk appetite, & financial objectives. Hence, a wise investment, staying informed, & a holistic approach lead to a secure financial future for your child.